THE RELATIVE-PROFIT-MAXIMIZATION OBJECTIVE OF PRIVATE FIRMS AND ENDOGENOUS TIMING IN A MIXED OLIGOPOLY

Yuanzhu Lu ()

The Singapore Economic Review (SER), 2011, vol. 56, issue 02, 203-213

Abstract: This paper investigates whether the relative-profit-maximization objective of private firms affects endogenous timing in a mixed oligopoly in the linear demand case. Assuming firms have constant marginal costs and symmetric private firms are more efficient than the public firm, it is found that such an objective does not affect endogenous timing compared with the absolute-profit-maximization case. When the equilibrium involves the public firm acting as a leader, social welfare increases compared with the level in the absolute-profit-maximization case. When the equilibrium involves the public firm acting as a follower, social welfare remains unchanged.

Keywords: Mixed oligopoly; endogenous timing; Stackelberg; relative profits; L13; D43; H42 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (22)

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DOI: 10.1142/S0217590811004201

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